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Sunday, 27 January 2013

Inter-Bank Mobile Payment Service (IMPS)
offers an instant, 24X7, interbank electronic fund transfer service through
mobile phones. There are two types of IMPS services: A personto-person (P2P)
service and a person-to-merchant (P2M) service. While the P2P service was
launched some 18 months ago, P2M service was made available only recently.

HOW TO START A P2P OR P2M SERVICE:

Register
your mobile number with your bank. Get a seven-digit Mobile Money Identifier,
or MMID, number. This number is used to identify your bank and is linked to
your account number. The combination of mobile number and MMID is unique for
particular account, and the customer can link the same mobile number with
multiple accounts in the same bank, and get separate MMID for each account. After
this, get a Mobile Banking PIN, or M-PIN, which is a password to be used during
transactions for authentication and security. Download mobile banking
application or use the SMS facility provided by the bank to make a payment.

HOW TO SEND OR RECEIVE FUNDS FOR P2P
TRANSACTIONS:

To
send money, initiate an IMPS transaction using the mobile app or SMS. You need
to enter the beneficiary's mobile number and MMID, amount and M-PIN for
initiating a transaction. You will then receive a confirmation SMS for the
transaction. To receive money, share your mobile number and MMID with the
sender. The sender then initiates the above-mentioned steps. And you get an SMS
confirmation for the money received.

HOW DOES THE P2M SERVICE WORK:

There
are two ways in which P2M transactions can be performed: customerinitiated
transactions (P2M PUSH) and merchantinitiated transactions (P2M PULL). P2M push
transactions can be used for paying insurance premium, mobile /DTH recharge,
credit card fee, utility bills, over-the-counter payments, and face-to-face
payments such as pizza delivery, couriers and cabs. For P2M PUSH, a customer
initiates transaction through the mobile banking app or SMS facility provided
by the bank. For P2M PULL, the transaction is initiated through the website of
the merchant. Plus you need to get a one-time password (OTP) from your bank.

IS THERE A CASH LIMIT:

Yes.
Most banks cap the daily limit via IMPS app at Rs 50,000 per day. SBI limits
transfers to Rs 1,000 per day through the SMS mode.

Friday, 25 January 2013

State Bank of India (SBI) has entered into a pan-India tie-up with Shriram Automall India Ltd, a subsidiary of Shriram Transport Finance Company, for assisting in post-seizure, warehousing and sale of seized tractors through organised public sale.

SBI, in a statement said, the tie-up would help the company in better price recovery of impaired assets in the form of tractor loans, as Shriram Automall will offer end-to-end solution through more than 65 auto malls.

The auto mall offers a common meeting platform for potential buyers and sellers where the valuation of the vehicle is determined through a transparent process.

“It is expected that a large number of non-performing tractor loan accounts would be addressed through this tie-up in the coming months. Apart from ensuring optimum recovery from the sale of old tractors, this tie-up is expected to create a market for pre-used tractors also where SBI may explore lending opportunities,’’ the bank said.

The middle class is rising in a big way, especially in developing countries. About 42 per cent of workers, or nearly 1.1 billion, are now ‘middle-class’, living with families on over Rs 225 ($4-13) per person per day, says a new ILO report.

By 2017, the developing world could see the addition of 390 million more workers in the middle class, the International Labour Organisation (ILO) report says.

“Over time, this emerging middle-class could give a much needed push to more balanced global growth by boosting consumption, particularly in poorer parts of the developing world,” said Steven Kapsos, one of the authors of the Global Employment Trends 2013.

Employment growth

However, the report raises a red flag for employment growth in 2013-14, even if there is a moderate pick-up in output growth.

It estimates that the number of unemployed worldwide may rise by 5.1 million to more than 202 million in 2013 and by another 3 million in 2014, half-a-million of which will be youth.

“The indecision of policy-makers in several countries has led to uncertainty about future conditions and reinforced corporate tendencies to increase cash holdings or pay dividends rather than expand capacity and hire new workers,” says the report.

GDP growth

The ILO report noted that in India, growth in investment contributed 1.5 percentage points to the overall GDP growth over the past year, down from 1.8 percentage points in 2011, while the contribution from consumption declined to 2.8 per cent versus 3.2 per cent the previous year.

Job creation, labour productivity

For countries such as India, the report called for focus on both employment creation and labour productivity.

It noted that in India, even where jobs were created, a large number of workers remained in agriculture (51.1 per cent), in the urban informal sector or in unprotected jobs (contract) in the formal sector.

The share of workers in manufacturing was just 11 per cent in 2009-10, no higher than a decade earlier.

Like many regions, growth has failed to deliver a significant number of better jobs in the formal economy.

Formal employment

Most notably in India, the share of formal employment has declined from around 9 per cent in 1999-2000 to 7 per cent in 2009-10, in spite of record growth rates, it said quoting a study.

Using a comparable definition for the latest year available, the report said the share of workers in informal employment in the non-agricultural sector stood at 83.6 per cent in India (2009-10), 78.4 per cent in Pakistan (2009-10) and 62.1 per cent in Sri Lanka (2009).

The Reserve Bank today hiked FII investment limits in Government securities and corporate bonds by $5 billion each, taking the total cap in domestic debt to $75 billion, with a view to bridging the current account deficit.

Further liberalising the norms, the three-year lock-in period for foreign institutional investors (FIIs) purchasing Government securities (G-Secs) for the first time has been done away with, RBI said.

The sub-limit of $10 billion for investment by FIIs and long-term investors in G-Secs stands enhanced by $5 billion, it said.

The limit in corporate debt, other than infrastructure sector, stands enhanced from $20 billion to $25 billion, RBI said.

With an increase of $5 billion in each of the two categories, FIIs and long-term investors can now invest $25 billion in G-Secs and $50 billion in corporate debt instruments, taking the total to $75 billion.

The earlier FII investment limit in G-Secs was $20 billion and for corporate debt it was $45 billion, including a sub-limit of $25 billion for infra bonds.

RBI further said: “Residual maturity condition shall not be applicable for the entire sub-limit (in G-Secs) of $15 billion but such investments will not be allowed in short-term paper like Treasury Bills, as hitherto”.

The overall FII limit of domestic debt is distributed through a host of categories across Government, corporate and infrastructure debt.

Government, which is battling a high current account deficit (CAD) — the gap between inflows and outflows of foreign funds — is trying to attract more foreign funds into the country.

The CAD touched a record high of 5.4 per cent in the July-September quarter of the current fiscal.

In order to check the outflow of foreign currency, the Government recently hiked the import duty on gold and also took steps to encourage mutual funds to park their gold in deposit schemes offered by banks.

As a measure of further relaxation, the RBI added that it had dispensed with the one-year lock-in period on holding infrastructure bonds.

Developing countries overtook their traditionally wealthier counterparts in attracting foreign direct investment for the first time last year, as industrialised nations bore the brunt of an 18 per cent plunge in FDI flows, the UN’s trade and investment think tank Unctad has said.

Last year, global foreign direct investments — when a company in one country invests for instance in production facilities or buys a business in another country — came in at $1.3 trillion, down from $1.6 trillion in 2011, Unctad’s Global Investment Trend Monitor showed.

In a dramatic shift on the global investment scale, developing countries reaped $680 billion of that, or 52 per cent of the total.

“For the first time in history, developing countries have attracted more investment than developed countries,” James Zhan, who heads UNCTAD’s investment and enterprise division, told reporters in Geneva.

The shift was largely prompted by evaporating investments in crisis-hit developed economies like the United States, European nations and Japan, which accounted for 90 per cent of the $300 billion-decline in global FDI last year, Zahn said.

“We thought we were on the way to a steady recovery, (but) the recovery has derailed,” added Zahn, who pointed out that global investment figures had turned upwards in 2010 and 2011. But amid growing market uncertainty, they fell last year to near the historic low of $1.2 trillion which came during the worst of the global financial crisis in 2009.

The US, which remains the world’s largest recipient of foreign direct investment, saw its FDI inflows slip more than 35 per cent to $147 billion, while Germany saw its net investment level plunge from $40 billion in 2011 to just $1.3 billion last year, mainly due to large divestments there.

“Developing countries also suffered from the global decline,” Zhan said, “but the decline was much more moderate.”

Asia, which raked in 59 per cent of all FDI to developing countries, saw its inflows dip 9.5 per cent, with China, the world’s second-largest recipient of such investments, registering a 3.4-per cent drop in 2012 to $120 billion.

South America and Africa meanwhile registered positive growth in FDI flows last year.

Last year’s overall drop in investments came despite the fact that the global economy grew 2.3 per cent in 2012, while worldwide trade was up 3.2 per cent.

Going forward, Unctad expects FDI flows to rise to just $1.4 trillion this year and to $1.6 trillion in 2014 — still far below the 2007 pre-crisis level of some $2.0 trillion in investments.

nternational Monetary Fund (IMF) in at update to World Economic Outlook
(WEO) on 23 January 2013, projected that the global economic growth rate
would be 3.5 percent in 2013. The update mentioned that the global
economic growth would strengthen gradually as the limitations of the
economic activities have seen a positive note with the start of the
year.

Some of the major projections of IMF are

• Global growth would reach 3.5 percent in 2013, from 3.2 percent in 2012• Crisis risks would narrow down but the downside risks will remain crucial• Main sources of growth would be the emerging markets, developing countries and the United States

Reasons that may be beneficial in betterment of the economic growth

•
The actions taken in policy making have been responsible in reducing
the risk of the acute crisis situation faced in the area and the United
States. • Actions in terms of plans taken by Japan would also be
beneficial in pulling it out from a short-lived recession kind of
condition. • The policies made by the emerging economies of the
world in terms of policy making is has also shown positive outcomes with
a good start in the year

The report also described that if the
risks of crisis doesn’t materialize, then the expected targets of growth
may be crossed and can be stronger then that is projected. Thing that can show an impact, the growth or result into the downfall

• Fiscal tightening, if crosses an excessive limit in United States it may have an adverse impact on the economic growth• Long-term stagnation of the euro-area would also have an adverse impact

Situations that hinted towards improvement in economic conditions

The
economic conditions of the world had shown a positive movement in the
third quarter of the 2012 and this was change brought by the performance
displayed on the economic front by the emerging economies of the world
as well as United States. The borrowing cost of the countries in Euro
Zone was marginally better than expected but it also identified some of
the weaknesses in the core Euro area. Japan was under the effect of
recession in the second half of 2012, which had shown positive signs of
improvement in the running year.

Forecasts and the Expected Changes

•
In terms of Euro Zone, IMF managed to downgrade its forecast as this
economic situation of the region may contract a bit n 2013. • The
report also observed slight improvement in the financial conditions of
the banks and governments of the Periphery economies, occurred due to
the policy actions undertaken by them but these economies has yet not
improved in terms of the borrowing conditions in private sector. •
In terms of United States, the forecast remained broadly unchanged to
that of the of October 2012 WEO to 2 percent, but predicted that the
support offered to the financial market would support the growth in
consumption in the country• In terms of Japan, the near-term
outlook has also remained unchanged regardless of the recession
witnessed by the country in recent past and it’s expected that the
monetary easing and incentive package would boost the growth in the
country• The report projected that the developing economies and
the emerging market of the world would grow by 5.5 percent in 2013 and
it will remain almost same as it was predicted in October 2012 WEO. •
In case of China, the IMF has forecasted a growth rate of 7.8 percent,
8.2 percent and 8.5 percent in 2012, 2013 and 2014 respectively. In
2011, it witnessed a growth rate of 9.3 percent. Findings of the report and threats

•
Following the findings of the report in detail, it’s projected that
the Euro Area is one of the biggest threat to the Global Economic
Outlook as it poses a downside risk to the economy. If the momentum of
reforms is not maintained in the Euro Area than the risk of prolonged
stagnation would increase• To move ahead of the risk factor,
adjustment programs from the periphery countries should continue and be
supported by the firewall developments for prevention of the contagion
and take steps towards banking union and fiscal integration, the report
stated. • In case of United States, excessive fiscal consolidation
in short term should be avoided and it should raise the debt ceiling
and should move ahead to identify a credible medium-term fiscal
consolidation plan, that focuses towards entitlement and tax reform.•
In context of Japan, the report identified that it should find out a
medium-term fiscal strategy as lack of such an strategy can bring risks
to the stimulus package to it • The developing nations and emerging economies need to make fine policies to tackle the of rising domestic imbalances

The
overall decrease in the forecast for the global economic growth rate is
the result of the economic slowdown witnessed by the world due to the
Euro Zone Crisis in existence. The Euro Zone crisis had an adverse
impact on the export and import of the world, leading to great set-backs
to the emerging economies of the world as well as the developed
economies. Before, Euro Crisis the world also suffered from the
recession that hit the United States of America in 2009. Japan also
witnessed an economic slowdown after the Tsunami that hit the country in
2011 and affected the Fukushima nuclear Plant.

The International Monetary Fund (IMF) on
23 January 2013 projected that the economic growth rate of India in
2013 would be 5.9 percent. The IMF also projected an increased growth
rate of 6.4 percent for 2014 looking forward towards the gradual
strengthening of the global expansion in India’s context.

In its
update at the World Economic Forum (WEO), the IMF also forecasted that
the global economic growth rate would be 3.5 percent, little higher than
the 3.2 percent estimated earlier. As per the report of IMF,
uncertainty in policy making and supply bottlenecks were one of the most
visible causes that hampered the growth aspects of the economies like
India and Brazil. It also stated that the scopes of easing the policy to
any further extent have also gone down in these countries.

About International Monetary Fund (IMF):

The International Monetary Fund (IMF) is
an organization of 188 countries that works for fostering the global
monetary cooperation, promote high employment and sustainable economic
growth, facilitate international trade, secure financial stability and
reduce poverty around the world. Since the end of World War II, the IMF
had been playing a major role in shaping the global economy. The IMF has
played a part in shaping the global economy.

Tuesday, 15 January 2013

Allowing these companies to raise ECBs would help them diversify their
source of borrowings and raise funds at cheaper rates, they have
submitted.

Also, such long-term borrowings would lend stability to the
asset-liability profile of the AFCs, the Finance Industry Development
Council (FIDC) has said.

This suggestion forms part of the representation made by the FIDC to the
RBI on the draft guidelines of the Usha Thorat Committee report on
issues and concerns of NBFC sector.

FIDC is a self-regulatory organisation representing the Asset Financing NBFCs.

This industry body has also said that Tier-I capital requirement for AFCs be maintained at the existing level of 7.5 per cent.

If it is enhanced to 10 per cent, then the risk weight assigned to
productive and real assets such as commercial vehicles, construction
equipment, tractors, multi-utility vehicles and cars be reduced to 50
per cent levels, FIDC has said.

The draft guidelines of the Usha Thorat committee stipulate that Tier-I
capital for capital adequacy ratio purposes be enhanced to 10 per cent
(12 per cent for captive NBFCs and those lending to sensitive sectors).

Existing NBFCs have to conform to this norm within three years from the date of notification, the committee has proposed.

Urjit Patel took over as the Deputy Governor of the Reserve Bank of
India on January 14. The Government has appointed him for a period of three
years from January 11, 2013. 49-year-old Patel is the fourth Deputy Governor, the other three being
K. C. Chakrabarty, Anand Sinha and Harun R. Khan. He comes in place of
Subir Gokarn, whose term ended on December 31, 2012.

Patel, who is a Ph.D. (Economics) from Yale University, and M. Phil.
from Oxford, has been assigned the abovementioned portfolios. Prior to
his appointment as Deputy Governor, Patel was Advisor (Energy &
Infrastructure), The Boston Consulting Group.

The new Deputy Governor has been a non-resident Senior Fellow, The
Brookings Institution, since 2009. Patel was with International Monetary
Fund (IMF) between 1990 and 1995.

Patel was on deputation (1996-1997) from the IMF to the RBI and provided
advice on development of the debt market, banking sector reforms,
pension fund reforms, real exchange rate targeting and evolution of the
foreign exchange market.

He was a Consultant (1998-2001) to the Ministry of Finance, Department of Economic Affairs, New Delhi.

Some of Patel’s previous assignments include, President (Business
Development), Reliance Industries Ltd; Executive Director and Member of
the Management Committee, Infrastructure Development Finance Company Ltd
(IDFC) (1997-2006); Member of the Integrated Energy Policy Committee of
the Government of India (2004-2006); and Member of the Board, Gujarat
State Petroleum Corporation Ltd.

Sunday, 13 January 2013

In order to enhance risk management system of banks, the Reserve Bank of India (RBI) has proposed tweaking norms for capital adequacy with regard to their exposure in derivative instruments.

Under the new framework, banks’ exposure to central counterparty (CCP), a clearing house, arising from OTC derivatives, exchange traded derivatives and Securities Financing Transactions (SFTs) will be subjected to capital requirements for counterparty credit risk, the RBI said in a draft guidelines.

The central bank has invited feedback from the banks on the draft guidelines on ‘Capital requirements for bank exposures to central counterparties’ by end of this month.

A CCP is a clearing house that interposes itself between counterparties to contracts traded in one or more financial markets, becoming the buyer to every seller and the seller to every buyer and thereby ensuring the future performance of open contracts.

For the purpose of regulatory capital calculation, CCPs will be considered as a financial institution.

The draft norms noted that one of the lessons learnt from the recent crisis has been that OTC derivatives market may be one of the channels for contagion during the crisis.

It was, therefore, decided by the G20 leaders that standardised OTC derivative contracts should be settled through CCPs.

Central clearing will reduce systemic risk by reducing the contagion risk as problems at one institution will not be transmitted to other institutions through OTC derivatives market.

However, requirement of central clearing also concentrates too much risk within the CCPs and any failure of a CCP may be catastrophic for the entire financial system, it said.

The draft norms propose amendments in the Guidelines on Implementation of Basel III Capital Regulations issued in May last year.

The effective date of implementation of Basel III guidelines has been deferred to April 1, 2013

Allahabad Bank has signed a memorandum of understanding with the Chamber of Indian Micro, Small and Medium Enterprises to shore up its priority-sector lending. The Chamber will get proposals from its members for consideration of the bank. Once a loan is sanctioned, the organisation will support the bank in follow-up and recovery and provide early warning signals.

ItzCash Card, a multi-service prepaid card company of the Essel Group, has tied up with HDFC Bank and Visa to launch corporate gift cards. The HDFC Bank ItzCash Visa Gift Card offers a wide range of products and can be used at over a million outlets where Visa cards are accepted. Employers can use the card to reward staff members, customers or pay commissions. The card can be purchased for any value. It comes with a range of security features designed to protect cardholders from unauthorised purchases if their card is stolen. The gift card, which is valid for one year, cannot be reloaded by paying at bank branches and cannot be used in ATMs for withdrawal of cash. The card can be used for purchases at shops and online transactions over the Internet.

The Reserve Bank of India in the month of January 2013 had set up a working group to evaluate and make improvements in the grievance redressal mechanism for bank customers.

The working group constituted in the Reserve Bank of India is going to review, update, and revise the Banking Ombudsman Scheme, 2006.

As per the RBI annual report of the Banking Ombudsman Scheme 2011-12, In Financial Year 2011-12, the banking ombudsman’s office of the RBI received around 72889 complaints. It disposed off 94 per cent of the customer complaints, About one-fourth of the total customer complaints were about banks’ failure to meet commitments and non-observance of fair practices code.

Also, it was seen that the Banking Ombudsman received 14492 card-related complaints in the reporting year. Unsolicited cards and charging of annual fee in spite of being offered ‘free’ card formed the basis of some of the complaints against the banks.

Presently, we have 15 Banking Ombudsmen with unambiguous jurisdiction covering the 29 States and seven Union Territories in India.

Allahabad bank signed a Memorandum of Understanding (MoU) with Chamber of Indian Micro, Small and Medium Enterprises (CIMSME) in Kolkata on 4 January 2013. The MoU was signed to support the priority sector lending.

CIMSME is basically a body that represents interest of the companies in the Micro, Small and Medium Enterprises (MSME) sector, with the financial institutions, banks, concerned ministries as well as other organisations.

According to the agreement, CIMSME would help in activating the proposals from the members for the due consideration of the bank. Once the bank sanctions the loan, CIMSME would help the bank in following-up as well as recovering the dues. CIMSME would also help in providing the early signs of warning, if they exist.

MoU signed between the two will basically help in accelerating the process of faster clearance of loan proposals which lie under MSME. It would additionally, also enable the bank in acquiring quality proposals as well as boosting up the credit flow to this sector.

MoU signed between CIMSME and Allahabad Bank was executed by General Manager (SME & Retail Credit) as well as the President of CIMSME in the presence of CMD of Allahabad Bank.

R.K. Dubey, 59, has been appointed the Chairman and Managing Director of Canara Bank. Dubey’s was areas of expertise include planning and budgeting, resource mobilisation, credit, risk management, human resources (HR), IT and marketing. A post-graduate in English, Dubey also has a degree in law and management in HR practices. He is also a certified associate of the Indian Institute of Bankers. Dubey joined Punjab National Bank in 1977 as a management trainee and moved up the ranks to become a general manager in 2008 and was appointed as executive director of Central Bank of India in 2010.

Saturday, 12 January 2013

The Union Cabinet has approved a capital infusion package of Rs 12,517 crore for about 10 public sector banks.

According to the Cabinet Committee on Economic Affairs (CCEA), the move
will enable the banks to maintain a minimum tier-1 CRAR (capital to risk
weighted assets ratio) at comfortable level under international bank
capital adequacy standard norm BASEL-III. This will ensure compliance to
the regulatory norms on capital adequacy and will cater to the credit
needs of productive sectors of the economy, as well as, to withstand the
impact of stress in the economy.

This additional availability of credit will cater to the credit needs of
our economy and will also benefit employment oriented sectors,
especially agriculture, micro and small enterprises, export,
entrepreneurs."

Earlier the government has infused about Rs 20,117 crore in public sector banks during 2010-11, and Rs 12,000 crore in 2011-12.

According to the Economic Survey for 2011-12, the capital infusion had
enabled PSBs to "maintain a minimum tier 1 CRAR at eight percent on 31st
March, 2012, and also increased shareholding of the government in PSBs
to 58 percent".